VANNI Treves, chairman of Equitable Life, yesterday indicated the society would consider settling its pounds-3.7bn legal claim against former auditor, Ernst & Young, and former directors, out of court.
Addressing a packed annual meeting of the society's policyholders in London, Treves said he was "surprised and disappointed" the legal claims against E&Y and the directors were not settled before getting to court.
He added: "We remain ready to accept a serious and substantial settlement if any comes . . .
(if not) we are ready to fight on."
The case, which has run for the past six weeks and is scheduled to last until Christmas, is expected to rack up total legal costs for all parties of more than pounds-100m - which Equitable would have to pay if it lost.
A spokesman for Ernst & Young last night said: "We have always believed, and repeatedly made it clear to Equitable, that this claim is without merit, and the last six weeks in court have only served to reinforce that view.
"We have said from the start that Equitable are wasting policyholders' money."
Asked whether Treves's comments were an indication of how the society felt its case was going, a spokesman denied Treves was extending an olive branch, and said Equitable's legal counsel, Herbert Smith, remained "bullish" about the strength of its case.
Treves had earlier explained to policyholders that the board had been advised that not to pursue the legal claims would have been "a dereliction of our fiduciary duties as directors".
The society alleges that both Ernst & Young and the former directors failed to warn the insurer of the risks of over-generous policy guarantees, which brought the society to the brink of collapse in 2000.
Policyholders also called the pay of Charles Thomson, Equitable's Scots-born chief executive, "obscene". He banked pounds-659,813 in 2004, up from pounds-508,113 a year earlier.
Additionally, Treves revealed the board is currently carrying out a review of strategy, looking at the options for the long-term future of the society.
The chairman said as well as a possible sale, it is also considering unitising the mutual's pounds-10bn with-profits fund, which would give policyholders more freedom to invest in shares.
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